The National Company Law Tribunal (NCLT) in Hyderabad has started insolvency proceedings against GVK Power & Infrastructure (GPIL) after ICICI Bank and five other banks sought to recover about Rs 18,000 crore from the company.
ICICI Bank first filed the petition in November 2020 to recover $1.35 billion lent through its branches in Dubai, Bahrain, and Singapore, along with three other lenders. GPIL owes over $2.6 billion in loans and corporate guarantees, mostly from foreign branches.
The other banks involved are Bank of Baroda (Ras Al Khaimah branch), Bank of India (London branch), Canara Bank (London branch), ICICI Bank (Bahrain, Dubai and OBU branches), Indian Overseas Bank (large corporate branch, India), and Axis Bank.
In an 82-page order, the court noted that GPIL acknowledged its debts in annual reports for 2019, 2020, and 2021. ICICI Bank filed the petition when GPIL couldn’t repay despite repeated promises. The court rejected GPIL’s claim that the NCLT lacks jurisdiction because the loans were mostly from foreign branches.
Following the news, GPIL’s shares fell by 5%, closing at Rs 10 each on the BSE. The court appointed Satish Kumar Gupta as the interim resolution professional. Gupta has previous experience handling the insolvency of Essar Steel.
Bankers believe that starting the insolvency process increases the chances of recovering the debt. While the company’s assets don’t match the loan amounts, there is hope for a one-time settlement and some value in the remaining assets.
GPIL’s latest annual report lists a gas-based power project, GVK Gautami Power (464 MW), a hydro power project, Alaknanda Hydro Power (330 MW), and the GVK Jaipur Expressway as assets.
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